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TMI BlogStatutory provision offering tax deductions through savings and investments in specified financial products : Clause 123 of the Income Tax Bill, 2025 Vs. Section 80C of the Income Tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... tributions to provident funds, and other specified investments. This clause is part of a broader legislative effort to provide tax relief and incentivize savings and investments among taxpayers. It mirrors the existing Section 80C of the Income Tax Act, 1961, which has been a cornerstone of tax deductions for Indian taxpayers for several decades. This commentary provides a detailed analysis of Clause 123 and compares it with Section 80C to understand their similarities, differences, and implications. Objective and Purpose The primary objective of Clause 123 is to encourage savings and investments by offering tax deductions for specified financial products. This aligns with the broader policy goal of promoting financial security and self-r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 123 is INR 1,50,000, aligning with the existing limit u/s 80C. This consistency ensures that taxpayers do not face sudden changes in their tax planning strategies. 3. Conditions and Requirements: - The clause specifies that deductions are subject to conditions outlined in Schedule XV. While the exact conditions are not detailed in the document, they likely include requirements similar to those in Section 80C, such as minimum lock-in periods and eligible beneficiaries. Detailed Analysis Section 80C of the Income Tax Act, 1961 Section 80C, provides a comprehensive framework for tax deductions on specified investments. It covers a wide range of financial products and has evolved over time to include new investment options. 1. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Analysis 1. Scope and Coverage: - Both Clause 123 and Section 80C apply to individuals and HUFs, covering similar financial products. However, Section 80C offers a broader range of investment options, reflecting its longer history and evolution. 2. Deduction Limit: - The deduction limit of INR 1,50,000 is consistent across both provisions, ensuring stability in tax planning for taxpayers. 3. Eligible Investments: - While both provisions cover life insurance, deferred annuities, and provident funds, Section 80C includes additional options such as equity-linked savings schemes and housing-related investments. This broader coverage u/s 80C offers greater flexibility for taxpayers in managing their investments. 4. Conditions and Requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and institutions, enhancing the overall economic stability of the country. Conclusion Clause 123 of the Income Tax Bill, 2025, and Section 80C of the Income Tax Act, 1961, are pivotal in shaping the tax landscape for Indian taxpayers. Both provisions aim to encourage savings and investments, offering tax relief and promoting financial security. While Clause 123 aligns closely with Section 80C in terms of scope and deduction limits, Section 80C's comprehensive coverage and detailed conditions reflect its established role in tax planning. As the financial landscape evolves, these provisions will continue to play a crucial role in guiding taxpayer behavior and supporting economic growth. Full Text: Clause 123 Deduction for life insur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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